Tiny Hopkins energy start-up ready for major launch

Article by: NEAL ST. ANTHONY

Star Tribune

December 4, 2011 - 6:32 PM

Think of Novus Energy as a ''potato-peels-to-energy'' play.

The development-stage company is focused on rapidly producing "bio gas" and liquid fertilizer from crop and food-plant wastes. Last week, the Hopkins-based company closed on a round of capital that will permit Novus and partners to build an inaugural plant in Oregon.

Novus CEO Joe Burke said an existing investor has supplied $6.2 million in additional equity needed to begin planning and construction of a $10 million plant in Boardman, Ore., along with a partner company that buys crop residue and waste from potato and other food processors.

What's the secret sauce?

Burke declined to go into detail, but said the company aims to commercialize what he describes as a patented, leapfrog technology that accelerates the breakdown of organic matter, whether crop waste or potato peals, into bio gas.

"We have a catalyzed anaerobic [that means "no oxygen''] digestion system to produce [methane] gas from organic waste in four to five days versus the usual 30 days, and we convert 90 percent of it to gas and liquid fertilizer and water, and a dry soil supplement," he said. "This will be a zero-waste plant that will create energy that will be fed to a pipeline ... which will solve a waste problem for a customer."

Burke, 47, said Novus also is in negotiations with an unspecified Twin Cities food-processing company interested in adapting the technology.

So far Novus has operated with only several employees but has partnered with the energy services division of St. Paul-based Harris Cos., the engineering and mechanical contractor, and Adolfson & Peterson Construction. Burke said the company has run lean for two years as it proved its technology, supported in part by investments from Harris and Adolfson.

The original investors in Novus include dozens of individuals, including farmers and business people, and two institutional investors.

Burke, an electrical engineer and corporate manager, was hired in 2009 to commercialize the Novus technology. He came from G&K Services, where he worked for 18 years and was last vice president of operations and engineering.

Surya Pidaparti, an environmental engineer for 25 years and the Novus senior project engineer, last worked for Siemens Water Technologies as director of industrial projects. Pidaparti has built and managed waste-to-energy plants, wastewater reclamation and ag-residue treatment plants.

To prove the technology, Novus, Adolfson and Harris built a $500,000 pilot plant in a 50-foot semitrailer that's been operating successfully for several months in Minnesota and Oregon.

"We have a history of working with Adolfson & Peterson, and we like Joe Burke and Novus," said Greg Hosch, CEO of St. Paul-based Harris. "This is a new twist on an old technology. We're willing to take a crack at a different project that we think is innovative and has a good chance of success. We're hopeful it will lead to more plants and sales and profits for our company."

Higher cash flow

At today's low prices for natural gas, Burke said Novus probably cannot make money solely on gas sales. But the new plant should see higher cash flow, even if gas prices stay low, when the additional sales of fertilizer and the dry soil supplement are considered.

Harrison Pettit, a vice president of Powerstock, Novus' Oregon partner, said the new plant will be built in an industrial park in Boardman, Ore., close to potato and onion processing plants and hundreds of farms.

"We met the Novus people two years ago and decided it would be a good fit," said Pettit. "We are the local development partner.''

Powerstock is owned by Pacific Ag Solutions, an onion grower and a farm-residue harvesting company. So there's plenty of raw material for the new plant to work with.

"We're going to use a combination of ag waste from processing potatoes, onions and waste from fields, baled residue and manure. We're running a variety of sample feedstocks to finalize the exact quantities and blends to provide a year-round, stable supply. We're in a place where there is an overabundance of feedstocks."

Boardman also boasts food-processing plants, utilities and Tidewater Terminal, a big inland river-barge terminal. It also is home to the Port of Morrow, which has a range of industrial facilities located within its 7,000-acre site.

Pettit said the plant will feed gas into a pipeline that goes to run a power plant and could generate enough juice to power the equivalent of 10,000 homes.